2016 Annual Report For Web 7.3MB

exchange rates as at the dates of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are translated using
the exchange rates at the date when the fair value is determined.
The assets and liabilities of foreign operations are translated into
Canadian dollars at the rate of exchange prevailing at the reporting
date and their consolidated statements of income are translated at
the monthly rates of exchange. The exchange differences arising on
the translation are recognized in other comprehensive income. On
disposal of a foreign operation, the component of other comprehensive
income relating to that particular foreign operation is recognized in the
consolidated statements of income.
Any goodwill arising on the acquisition of a foreign operation and any
fair value adjustments to the carrying amounts of assets and liabilities
arising on the acquisition are treated as assets and liabilities of the
foreign operation and translated at the rate of exchange prevailing at
the reporting date.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, net of any
accumulated depreciation and any impairment losses determined. Cost
includes the purchase price, any costs directly attributable to bringing
the asset to the location and condition necessary and, where relevant,
the present value of all dismantling and removal costs. Where major
components of property, plant and equipment have different useful
lives, the components are recognized and depreciated separately.
AGI recognizes in the carrying amount of an item of property, plant
and equipment the cost of replacing part of such an item when the
cost is incurred and if it is probable that the future economic benefits
embodied with the item can be reliably measured. All other repair and
maintenance costs are recognized in the consolidated statements of
income as an expense when incurred.
Depreciation is calculated on a straight-line basis over the estimated
useful lives of the assets as follows:
Buildings and building components
Manufacturing equipment
Computer hardware
Leasehold improvements
Equipment under finance leases
Furniture and fixtures
Vehicles
20 – 60 years
10 – 20 years
5 years
Over the lease period
10 years
5 – 10 years
4 – 16 years
An item of property, plant and equipment and any significant part
initially recognized is derecognized upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or
loss arising on derecognition of the asset is included in the consolidated
statements of income when the asset is derecognized.
The assets’ useful lives and methods of depreciation of assets are
reviewed at each financial year-end, and adjusted prospectively, if
appropriate. No depreciation is taken on construction in progress until
the asset is placed in use. Amounts representing direct costs incurred
for major overhauls are capitalized and depreciated over the estimated
useful lives of the different components replaced.
LEASES
The determination of whether an arrangement is, or contains, a lease
is based on whether fulfillment of the arrangement is dependent on the
use of a specific asset or assets or the arrangement conveys a right to
use the asset.
Finance leases, which transfer to AGI substantially all the risks and
benefits incidental to ownership of the leased item, are capitalized at
the commencement of the lease at the fair value of the leased property
or, if lower, at the present value of the minimum lease payments. Lease
payments are apportioned between finance charges and reduction of
the lease liability so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are recognized in
finance costs in the consolidated statements of income.
Leased assets are depreciated over the useful life of the asset.
However, if there is no reasonable certainty that AGI will obtain
ownership by the end of the lease term, the asset is depreciated over
the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognized as an expense in the
consolidated statements of income on a straight-line basis over the
lease term.
BORROWING COSTS
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period of
time, which AGI considers to be 12 months or more, to get ready for its
intended use or sale are capitalized as part of the cost of the respective
assets. All other borrowing costs are expensed in the period they occur.
INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a business
combination is its fair value at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated
amortization and any accumulated impairment losses. The useful lives
of intangible assets are assessed as either finite or indefinite. Intangible
assets with finite useful lives are amortized over the useful economic
life and assessed for impairment whenever there is an indication that
the intangible asset may be impaired. The amortization method and
amortization period of an intangible asset with a finite useful life are
reviewed at least annually. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits embodied
in the asset are accounted for by changing the amortization period
or method, as appropriate, and are treated as changes in accounting
estimates. The amortization expense on intangible assets with finite
lives is recognized in the consolidated statements of income in the
expense category consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives, which include brand
names, are not amortized, but are tested for impairment annually,
either individually or at the CGU level. The assessment of indefinite life
is reviewed annually to determine whether the indefinite life continues
to be supportable. If not, the change in useful life from indefinite to
finite is made on a prospective basis.
Internally generated intangible assets are capitalized when the product
or process is technically and commercially feasible and AGI has
sufficient resources to complete development. The cost of an internally
generated intangible asset comprises all directly attributable costs
necessary to create, produce and prepare the asset to be capable
of operating in the manner intended by management. Expenditures
incurred to develop new demos and prototypes are recorded at cost as
internally generated intangible assets. Amortization of the internally
generated intangible assets begins when the development is complete
and the asset is available for use and it is amortized over the period of
expected future benefit. Amortization is recorded in cost of goods sold.
During the period of development, the asset is tested for impairment at
least annually.
Finite-life intangible assets are amortized on a straight-line basis over
the estimated useful lives of the related assets as follows:
Patents
Distribution networks
Demos and prototypes
Order backlog
Non-compete agreement
Software
4 – 10 years
8 – 25 years
3 – 15 years
3 – 6 months
7 years
5 – 8 years
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the consolidated
statements of income when the asset is derecognized.
IMPAIRMENT OF NON-FINANCIAL ASSETS
AGI assesses at each reporting date whether there is an indication
that an asset may be impaired. If such an indication exists, or when
annual testing for an asset is required, AGI estimates the asset’s
recoverable amount. The recoverable amount of goodwill as well as
intangible assets not yet available for use is estimated at least annually
on December 31. The recoverable amount is the higher of an asset’s or
CGU group’s fair value less costs to sell and its value in use.
Value in use is determined by discounting estimated future cash
flows using a pre-tax discount rate that reflects the current market
assessment of the time value of money and the specific risks of the
asset. In determining fair value less costs to sell, recent market
77 CONSOLIDATED FINANCIAL STATEMENTS
FIELD TO CONSUMER
2016 ANNUAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS 78